Government interest could make STF charge fines from J&F and Odebrecht

The appeals presented by the Attorney General’s Office to the Federal Supreme Court (STF) against decisions by Minister Dias Toffoli that suspended the fines imposed on J&F and Odebrecht for acts of corruption presented an argument of great interest to the government: the possible general review of leniency agreements, based on the open loophole, would put at risk payments to public bodies and other injured entities totaling R$24.7 billion.

This is the value of fines and reimbursements provided for in 50 leniency agreements signed by the Federal Public Ministry (MPF) with companies that confessed to wrongdoing and decided to collaborate with the investigations. Of these agreements, 27 were signed within the scope of Operation Lava Jato, accused by J&F and Odebrecht executives of coercion to conclude the agreements.

Thanks to Toffoli, the group of brothers Joesley and Wesley Batista stopped payments that would reach R$10.3 billion; Novonor, the new name of the Odebrecht family group, stopped deposits that would reach R$3.5 billion, according to updated calculations.

Values ​​are important for various bodies and state-owned companies

The amounts are important not only for the Union’s cash flow, but also for bodies or state-owned companies that would receive them, such as Caixa, Petrobras and BNDES, especially at a time when the government seeks to boost its revenues to meet the target of zero deficit in the Budget or to deliver social investments through these public companies.

Some signs have already been given that at least part of J&F and Odebrecht’s debts should be paid off. On February 8, Toffoli himself clarified that, in the case of Odebrecht, the decision does not apply to R$ 2.7 billion owed by the group to the Union, a debt resulting from the leniency agreement agreed with the Federal Attorney General’s Office ( AGU) and with the Comptroller General of the Union (CGU), bodies of the federal Executive. The clarification was requested by the AGU. The suspension of payments, the minister emphasized, would only apply to payments promised in the agreement with the Curitiba task force.

Since last year, Toffoli has shown signs of interest in getting closer to President Luiz Inácio Lula da Silva, who was upset with him in 2019, when, in prison, he was prevented by the minister from attending his brother Vavá’s wake.

Another sign that the government is interested in the resources was given in November last year, before Toffoli’s decisions. That month, the Union’s attorney general, Jorge Messias, sent a statement to the STF opposing an action by left-wing parties to review all leniency agreements for anti-corruption operations, with the recalculation of fines.

Left-wing parties say company executives were pressured into signing agreements

In the action, PSOL, PC do B and Solidariedade presented the same arguments later launched by J&F and Odebrecht: that the companies’ executives had suffered undue pressure to close the agreements, with threats of arrest; that the agreed amounts are exorbitant and exceed the payment capacity; and that, over the years, the agreements ended up causing losses that threatened the company’s survival (in the case of Odebrecht, which went into judicial recovery) or forced the sale of valuable assets (in the case of J&F, which regretted selling Eldorado Cellulose, and which is now trying to take it back in court).

In the PGR’s appeals, the Attorney General of the Republic, Paulo Gonet, refuted each of these arguments. After drawing attention to the billion-dollar amount that the Public Power would lose, he stated that the companies did not present concrete acts that represented coercion to close the agreements. On the contrary, they were advised by lawyers from the best law firms in the country capable of instructing them on the risks and benefits obtained. Pressure, in these situations, would be natural during negotiations of agreements of this type.

“It is obvious that individuals will always be in a position of pressure. It would be naive to assume that any large company would present itself to the Federal Public Ministry to close a leniency agreement if it did not realize the probability of suffering intense damage to its interests if it chose not to cooperate. The company is aware of the illegal acts that it and its directors have committed and is aware of the sanctioning measures that both the company and its directors are subject to. To mitigate these damages, the possibility of an agreement is opened to them. The agreement, in turn, must provide for serious and costly measures for individuals, under penalty of turning leniency into a trick for impunity,” he stated in the appeal against the suspension of Odebrecht’s fine.

In several sections of the resources, he draws attention to the fact that the executives would be subject to much greater punishment, with long periods of imprisonment, if they did not cooperate. It was only natural that they would suffer the consequences for the acts of corruption they committed.

A similar argument was presented by AGU in the demonstration against the action of left-wing parties. With obvious exaggeration, they claimed “if the company enters into the leniency agreement without having negotiated the plea bargain agreements, its executives, administrators and controllers will be arrested and sentenced the next minute”.

Jorge Messias countered, arguing that the possibility of punishment does not mean coercion. “The authors classify as coercion the fact that there is provision for a criminal reprimand for a certain illicit act. However, it is extremely inappropriate to label a lawful imposition (criminal punishment) for something illegal done by a company manager as ‘coercion’,” he told the STF.

PGR and AGU state that fines were defined regularly

Regarding the amounts of the fines, PGR and AGU stated that they were defined regularly, based on the Anti-Corruption Law of 2013, which expressly provided for the possibility of calculating the amount based on the “gross revenues of all legal entities actually belonging to or of right to the same economic group that has committed the illicit acts provided for in art. 5th of Law No. 12,846, of 2013, or applied for its practice”.

“The agreed values ​​cannot be seen as excessive either, if the company itself agreed to them. Again, the presumption here is that acceptance was preceded by studies on its fairness and on the company’s economic strength to support them. A company of the size of the one that signed the agreement, and which was aware of the difficulties arising from the damage to its image resulting from the acts it carried out, will certainly have considered all foreseeable eventualities, as well as the aspect of abandonment that any economic enterprise entails in the long term . This is the presumption that reality imposes”, said Gonet in the case of Odebrecht.

In his appeal against the suspension of J&F’s fine, he drew attention to the fact that R$4 billion, of the R$10.3 billion owed, would be allocated to the pension funds of Petrobras (Petros) and Caixa Econômica Federal employees. (Funcef).

The investigations by Operation Greenfield – composed of prosecutors from Brasília, with no connection to Lava Jato, from Curitiba – showed that the funds made harmful investments in J&F in exchange for bribes for their managers, hence the need for compensation. Another R$4 billion owed by Odebrecht would be allocated to BNDES, Caixa and FGTS, due to also disadvantageous investments. The remaining R$2.3 billion would go to social projects, following a plan drawn up by Transparency International.

There is still no date for the STF plenary to judge the PGR’s appeals against Toffoli’s decisions, nor to judge the action of the left-wing parties, which is more comprehensive. On the 8th, Toffoli gave Odebrecht 60 working days to try to renegotiate its debt together with AGU and CGU. No deadline was set for J&F for this, but the two companies will be able to analyze, for the necessary time, the hacked conversations of Lava Jato members to better support their requests for suspension and review of fines.

The PGR also refuted the use of this material. He argued that, in the case of J&F, the agreement was not reached by prosecutors in Curitiba, but rather in Brasília, where it was also approved in the first instance. In relation to Odebrecht, the organization argued that, since September, the company has had the material and would not need more time to analyze it.

Furthermore, PGR and AGU say that the STF is not the appropriate forum to re-discuss the agreements, something that should be done in the first instance, where they were approved, or even directly with the bodies involved, be it the MPF or the General Comptroller of Union (CGU).

The action of PSOL, PC do B and Solidariedade has as its rapporteur minister André Mendonça, who, before arriving at the STF and the Ministry of Justice, in the government of former president Jair Bolsonaro, actively participated in the negotiations of the Lava leniency agreements Jato and other operations at AGU and CGU. Unlike Toffoli, he did not give in to party calls to suspend company payments. This Friday (16), he called for a conciliation hearing between the companies that signed leniency agreements until 2020 with the PGR, AGU, CGU and the Federal Audit Court (TCU), to be held on the 26th.